SIGNIFICANT BENEFICIAL OWNER - THE COMPANIES ACT PERSPECTIVE

As per Section 469 of the Companies Act, 2013 (‘Act’) Central Government has the power to make rules for carrying out the provisions of this act.

With the power of Section 469 of the Act, the CG has made Companies (Significant Beneficial Owners) Rules, 2018 for carrying out the provisions of Section 90 of the Companies Act, 2013 which is amended in Companies (Amendment) Act, 2017 under section 22.

As per section 90, of the Act, every individual, who acting alone or together, or through one or more persons or trust, including a trust and persons resident outside India, holds beneficial interests, of not less than twenty-five per cent. or such other percentage as may be prescribed, in shares ( shares includes GDR, compulsory convertible preference shares or compulsory convertible debentures) of a company or the right to exercise, or the actual exercising of significant influence or control as defined in clause (27) of section 2 of the Act.
Also as per section 2(6), the expression ‘significant influence’ means control of at least 20% of total voting power, or control of or participation in business under an agreement in respect of associate company.
As per section 2(27), the  "control" shall include the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner;
The Companies (Significant Beneficial Owners) Rules, 2018 defines ‘significant beneficial owner’ as an individual who holds not less than 10% of beneficial interest which was earlier as per section 90 was 25% but also whose name is not entered in the register of members of a company as the holder of such shares.
For cases other than individuals is given below:-
1. Where the member is a COMPANY, the significant beneficial owner is the natural person holding not less than 10% share capital of the company or who exercises significant influence or control through other means.
2. Where the member is a PARTNERSHIP FIRM, the significant beneficial owner is the natural person holding not less than 10% of capital or has entitlement of not less than 10% profits of partnership.
3. Where no natural person is identified under 1 or 2, the significant beneficial owner is the natural person who holds senior managing official like in case of body corporate or HUF.
4. Where the member is a TRUST (through trustee), the beneficial owner shall be the author of the trust, the trustee or the beneficiaries with not less than 10% interest in trust and any other person exercising control over trust through a chain of control or ownership
FORMS TO BE FILED IN UNDER SECTION 90 OF COMPANIES ACT,2013 AND RULES THEREOF

• FORM BEN-1:- Every significant beneficial owner shall file a declaration in  such form within 90 days for existing beneficial ownership and within 30 days for any change in beneficial ownership. Also this form is to be filed by those who acquire beneficial ownership after the commencement of rules within 30 days of acquiring such ownership

• FORM BEN-2:-  After the receiving the declaration in FORM BEN-1, the company shall file a return in FORM BEN-2 within 30 days  from date of receipt of declaration along with fees.

• FORM BEN-3:- The Company shall maintain a register of significant beneficial owner in FORM BEN-3 and it shall be open for inspection for the  members during business hours for not less than 2 hours on  payment of fees which shall not exceed Rs. 50 per inspection.

• FORM BEN-4:- As per section 90(5), if the company believes that any person whether member or not is a significant beneficial owner or have the  knowledge of identity of significant beneficial owner or another person having such knowledge can issue notice in FORM BEN-4  or has been a significant beneficial owner in the preceding  3 years at any time from the  date of notice issued.

APPLICATION TO TRIBUNAL
The company shall apply to the tribunal within 15 days of expiry of time period mentioned  in the notice if the person fails to give information required by the company in the notice within maximum  30 days from the date of notice for order directing the shares in question be subject to restrictions including restriction on transfer of interest attached, suspension of right to receive dividend, suspension of voting rights or any other restrictions on all or any of the rights attached with shares.
NON APPLICABILTY
These rules shall not be applicable to the holding of companies/body corporates, in case of  Pooled investment vehicles/investment funds regulated under SEBI Act such as:-
1. Mutual funds
2. Alternative Investment Funds (AIFs)
3. Real Estate Investment Trusts (REITs)
4. Infrastructure Trusts (InvITs)

Compiled & edited by Mansi Bansal

Management Trainee, Compliance Chambers